Compared to two decades ago, the spending patterns of today’s retirees have changed dramatically:

Since 1989, the percentage of 65 to 74-year-olds with a mortgage or home equity loan payment rose from 21 percent to 37 percent in 2010. For 75-year-olds and above, that number rose from 6 percent to 21 percent.

Additionally, a greater portion of seniors’ expenditures is going towards mortgages and home equity payments. In 2012, interest payments constituted 4.3 percent of expenditures for those in the 65 to 74-year-old range, an increase from 2.7 percent in 1990.

Seniors are allocating more of their money toward discretionary purchases, but credit card debt has skyrocketed as well:

New and used car and truck purchases are some of the fastest-growing expenditures for seniors, reflecting the fact that seniors are driving longer. Seniors are also allocating more of their dollars towards pets, hobbies, and entertainment.

However, for 65 to 74-year-olds, the average credit card balance was $6,000 in 2010, up from only $2,100 in 1989. For individuals 75 and above, the average balance was not even measurable in 1989 but had ballooned to $4,600 by 2010.

“Unfortunately, the tax code tends to reward consumption and punish saving,” said Pamela Villarreal, author of the study. “Also, with interest rates as low as they are today, seniors have little incentive to save.”

Health care costs remain a significant portion of expenditures (11.4 percent of expenditures for 65 to 74 year olds and 14.7 percent of expenditures for those 75 and above), though they are not growing as fast as some other categories of spending.

“Reflecting on how seniors spend their money might conjure up a picture of a wealthy couple traveling around the world or a low-income individual having to choose between medicine and groceries. But the truth is somewhere in the middle,” Villarreal said.

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